Debut of next-gen networks to cost U.S. carriers $1.78 billion
Implementing a Long-Term Evolution data network, as is in the plans for both AT&T and Verizon, will be a costly $1.78 billion investment for each in the first year alone, a new study has found.
AT&T is expected to begin its roll-out of 4G LTE in 2011, while Verizon may look to get a jump on its competitor. But whenever the two largest wireless carriers in the U.S. begin their adoption of the LTE standard, the first year of roll-out alone will cost an estimated $1.78 billion, according to a new study from AIRCOM International.
"LTE represents a major undertaking for mobile operators," said Margaret Rice-Jones, CEO at AIRCOM International. "With an all IP-based network infrastructure, LTE requires completely new thinking compared to previous mobile technologies. Mobile operators around the world face very different challenges in embracing LTE, which will have serious implications on the levels of finance they need to raise."
Currently, the iPhone is only available on GSM networks. While SIM card-based phones are the standard internationally, carriers such as Verizon and Sprint in the U.S. use CDMA-based networks.
But Verizon's adoption of LTE could change that. Unlike the artificial split between North America and the rest of the world today, a large number of both domestic and international carriers plan to move to LTE within the next few years, including AT&T and T-Mobile USA.
If LTE catches on, the switch could let Apple build iPhones that stay with one core technology but which could be used worldwide with no real compromise.
The new report suggested that tier-one carriers like AT&T and Verizon must use "innovative approaches" in introducing a fourth-generation network. It said that options like network sharing will be an essential part of companies remaining profitable. It also said that current business practices, like subsidizing handsets, may not be profitable options in the future.
The estimated cost of LTE is highest in the U.S., where it easily tops the billion dollar mark. In second is Europe at $880 million, followed by the Middle East ($337 million) and Asia Pacific ($232 million).
"Very few operators have the available resources or shareholder freedom to meet these costs," Rice-Jones said. "This means that innovation within the mobile industry needs to be redefined. It has been traditionally tied to finding the next "killer application". The economic reality of the mobile industry now means that true innovation is finding technology that will enable operators to deliver services more cost effectively."
AIRCOM said it made its calculations based on expertise helping carriers switch to 3G and HSPA in the past. The data was released alongside the launch of the company's LTE Cost Calculator. The U.K. company has consulted with mobile operators in 135 countries.
"Despite the financial commitment required, there can be no doubting the tremendous potential of LTE technology in taking mobile services to the next level," added Rice-Jones. "LTE represents a major evolution and mobile operators must take an intelligent approach to network migration. With careful planning however, LTE will deliver sufficient network capacity and data speeds to further enhance the delivery of high bandwidth services to consumers globally."
AT&T is expected to begin its roll-out of 4G LTE in 2011, while Verizon may look to get a jump on its competitor. But whenever the two largest wireless carriers in the U.S. begin their adoption of the LTE standard, the first year of roll-out alone will cost an estimated $1.78 billion, according to a new study from AIRCOM International.
"LTE represents a major undertaking for mobile operators," said Margaret Rice-Jones, CEO at AIRCOM International. "With an all IP-based network infrastructure, LTE requires completely new thinking compared to previous mobile technologies. Mobile operators around the world face very different challenges in embracing LTE, which will have serious implications on the levels of finance they need to raise."
Currently, the iPhone is only available on GSM networks. While SIM card-based phones are the standard internationally, carriers such as Verizon and Sprint in the U.S. use CDMA-based networks.
But Verizon's adoption of LTE could change that. Unlike the artificial split between North America and the rest of the world today, a large number of both domestic and international carriers plan to move to LTE within the next few years, including AT&T and T-Mobile USA.
If LTE catches on, the switch could let Apple build iPhones that stay with one core technology but which could be used worldwide with no real compromise.
The new report suggested that tier-one carriers like AT&T and Verizon must use "innovative approaches" in introducing a fourth-generation network. It said that options like network sharing will be an essential part of companies remaining profitable. It also said that current business practices, like subsidizing handsets, may not be profitable options in the future.
The estimated cost of LTE is highest in the U.S., where it easily tops the billion dollar mark. In second is Europe at $880 million, followed by the Middle East ($337 million) and Asia Pacific ($232 million).
"Very few operators have the available resources or shareholder freedom to meet these costs," Rice-Jones said. "This means that innovation within the mobile industry needs to be redefined. It has been traditionally tied to finding the next "killer application". The economic reality of the mobile industry now means that true innovation is finding technology that will enable operators to deliver services more cost effectively."
AIRCOM said it made its calculations based on expertise helping carriers switch to 3G and HSPA in the past. The data was released alongside the launch of the company's LTE Cost Calculator. The U.K. company has consulted with mobile operators in 135 countries.
"Despite the financial commitment required, there can be no doubting the tremendous potential of LTE technology in taking mobile services to the next level," added Rice-Jones. "LTE represents a major evolution and mobile operators must take an intelligent approach to network migration. With careful planning however, LTE will deliver sufficient network capacity and data speeds to further enhance the delivery of high bandwidth services to consumers globally."
Comments
sounds like some of the things i've seen in IT in the last few years. Sell some super powerful piece of hardware but cripple it and sell performance on a sliding scale. depending on the performance you need you have to buy a license key.
they sell a lot of fiber switches this way. a 24 port switch will have 4 ports active out of the box and most of the nice features deactivated. you have to buy the licenses to activate everything
Paying between $20 and $100 a month (sure, some of this covers existing mobile phone costs).
But they only need to redirect $50 a customer per year into network upgrades. Under $5 a month. Given the iPhone rates alone they can easily squirrel away $5 a month for future investment from these customers, even if part of the cost is device subsidy (~$20/m).
Yeah big deal! Let's look at what AT&T is making off of 9 Million iPhone Customers; 9 million times the $30 that's mandatory for the data plan that's $270 Million Dollars a month = 3.24 Billion a year alone; average plan $120 of 9 million users = 1.08 Billion a month = 12.96 Billion Dollars a Year. This is AT&T with just 9 Million iPhone customers alone so I think that AT&T and Verizon can handle it.
Exactly...
I hate when I have to hear AT&T whine that their networks are being over taxed by the increase usage. Deal with it, upgrade or get out of town.
Hmm - would that work in a femto-cell arrangement? Just thinking that maybe you could tie in high speed internet and better cell coverage somehow and make a more compelling package deal.
Or wait - how about this for a killer app - cell phone service that actually works.
"LTE represents a major evolution and mobile operators must take an intelligent approach to network migration. With careful planning however, LTE will deliver sufficient network capacity and data speeds to further enhance the delivery of high bandwidth services to consumers globally."
I think of RAM & HDD storage...along with bandwidth...this statement seems shortsighted. Whatever the capacity, the consumers will soak it up. If there is excess, they will think of ways to use it up.
It's as bad as NTSC. "Let's shoehorn as much in as we can rather than evolve." That's what happens when business runs tech-two disparate mindsets with opposing goals.
That is not a huge number, considering that ATT's capex plans for 2009 are $18B (and I am sure Verizon must be in a similar league).
No, but they'll try and ram that number down your throat as to why they need to be able to throttle your connection, and why they need to increase your rates!
knocking the US out of the top ten (or twenty, in case we are already out of the top ten) tech countries
What are you referring to here?
they can and should do more.
ATT better roll out 3G in areas in need of it first ... oh ya, that's right, they can't make commitments to customers since THEY NEVER SEEM TO KEEP THEM!
I digress ... I just hope Apple does the right thing and offers ATT some competition. If they do, ATT will either get off their 20th century behinds and fix the issues, or customer's will be dropping away like flies.
Dear ATT ... customers come first, including those outside the 6 major metro areas.
So how many subscribers does AT&T have? 40 million?
If you are talking overall customers, over 70 million. Verizon is at 74 or so.
The money is insignificant compared to the carriers revenue stream.
ATT better roll out 3G in areas in need of it first ... oh ya, that's right, they can't make commitments to customers since THEY NEVER SEEM TO KEEP THEM!
I digress ... I just hope Apple does the right thing and offers ATT some competition. If they do, ATT will either get off their 20th century behinds and fix the issues, or customer's will be dropping away like flies.
Dear ATT ... customers come first, including those outside the 6 major metro areas.
LOL ATT has no idea what people is.